Hong Kong Bitcoin ETFs Encounter First Setback Despite Launch Success

Hong Kong’s Bitcoin ETFs experienced their first setback after launching on April 30, following their first cumulative daily BTC outflows on Monday.

The outflow came from the China Asset Management Bitcoin ETF, while the other Hong Kong-based products had no flows.

Hong Kong ETFs See Modest Inflows

According to Farside data, the China AMC Bitcoin ETF saw an outflow of $4.9 million on Monday. In contrast, the other Bitcoin and Ethereum ETFs in Hong Kong reported “zero” flows apart from Bosera Ethereum ETF, which saw 3.2 million in inflow on Monday.

Following their launch last week, the three Hong Kong’s Bitcoin ETFs amassed $262 million in assets under management (AUM) within their first week.

Despite these significant AUM figures, the asset inflows for Hong Kong’s Bitcoin and Ethereum ETFs amounted to less than $14 million during their first launch week. This figure pales compared to the billions of dollars that flowed into U.S. spot Bitcoin ETFs back in January.

Meanwhile, the Hong Kong spot Ethereum ETFs, the world’s first of their kind, did not make a significant impact, with a combined $54.2 million in AUM and total inflows of $9.3 million as of May 6.

Hong Kong ETF Performance Concerns

Despite the underwhelming performance of the Hong Kong spot ETFs, Bitcoin experienced a weekend surge, now trading close to $64,000, up from below $57,000 last week.

Senior Bloomberg ETF analyst Eric Balchunas has advised investors not to expect substantial numbers in Hong Kong compared to the U.S. market. He explained that the $310 million AUM of the Hong Kong ETFs is equivalent to $50 billion in the U.S. market. Therefore, these ETFs are already as substantial in their local market as U.S. ones are in theirs.

The Hong Kong equities sector is relatively small, with a total market cap of $4.5 trillion, compared to the $50 trillion worth of listed equities across all U.S. exchanges. In addition, the Hong Kong equities sector faces liquidity challenges due to slower economic growth in mainland China since 2022.

In a recent study conducted by crypto exchange OSL, nearly 80% of crypto-savvy investors in Hong Kong intend to invest in the new spot Bitcoin and Ethereum ETFs. However, these assets are currently inaccessible to mainland Chinese investors unless they also hold Hong Kong residency. Notably, this restriction could lead to lower transaction volumes for the ETFs than the United States.